Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 325
                                     H.D. 2

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 325, H.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to protect the health of
patients affected by the medical decisions made by the medical
director of a managed care plan by requiring that these clinical
decisions be made by a medical director who possesses an
unlimited license to practice medicine in the State.

     Testimony strongly supporting this bill was submitted by the
Hawaii Medical Association, the Hawaii Federation of Physicians
and Dentists, and the Hawaii Psychiatric Medical Association.
Your Committee also received testimony from Hawaii Medical
Service Association (HMSA) and Queen's Health Management
(Queen's) supporting the intent of this bill and suggesting an

     HMSA and Queen's recommended amending the definition of
"medical director" to recognize that medical directors' decisions
are based not only on medical necessity, but also on whether the
treatment or service is a covered benefit of the health plan.  

     Your Committee heard testimony that standards of medical
necessity have generally been established with reference to
accepted practices within the local medical community, and that
medical directors responsible for making medical necessity

                                 STAND. COM. REP. NO. 1032
                                 Page 2

decisions that affect patients in Hawaii should be familiar with
the local community and its medical standards and practices, and
accountable to the local licensing authorities.

     Your Committee has amended this bill by:

     (1)  Amending the definition of "medical director" as
          suggested by HMSA and Queen's;

     (2)  Making technical, nonsubstantive amendments for clarity
          and style; and

     (3)  Amending the effective date for purposes of continued

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 325, H.D. 1, as amended herein, and
recommends that it pass Third Reading in the form attached hereto
as H.B. No. 325, H.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,

                                   RON MENOR, Chair